Record numbers of prepaid gas and electricity customers in the UK stopped topping up after energy prices skyrocketed, Citizens Advice said.
By the end of April, the charity will have seen more than 1,300 cases of people going without pay-as-you-go electricity – known as self-disconnection.
It comes after a 54% hike in the energy price cap added an average of £700 to annual household bills.
The Treasury Department said energy bills are capped through the fall.
“We will not yet know how big the increase will be given the volatility in prices we are seeing now and it is right that we are waiting until we know how big the increase will be before deciding how that will be.” solution should look like,” a Treasury Department spokesman said.
Citizen’s Advice said its projected number of self-disconnections for April was up eightfold from the 162 cases it saw in the same month last year.
The number of callers seeking help because they can’t afford to top up their meters is already higher than the 2021 total, the charity told the BBC.
Claire Moriarty, chief executive of Citizens Advice, said prepaid customers were hit hard by April’s price hikes.
“This can be devastating — parents without hot water to bathe their children, families sleeping in their coats, and people with chronic illnesses unable to keep warm,” she said.
“The warning lights could not be flashing brighter and the worst is yet to come. The government needs to provide more support to help people cope with this mounting crisis.”
- Prepaid energy customers are feeling the strain
- Bill shocks millions as energy prices soar
- Why are prices rising so fast?
In early April, around 18 million households on standard tariffs saw their energy bills rise by an average of £693 from £1,277 to £1,971 a year.
But for the 4.5million prepay customers, often low-income, the rise was larger – a £708 jump from £1,309 to £2,017.
Energy regulator Ofgem has previously defended the difference, saying there are higher fixed costs associated with running a prepayment meter.
Earlier this month, energy chiefs warned MPs millions of people could fall into energy poverty this winter due to price hikes.
Scottish Power chief executive Keith Anderson told the Business, Energy, and Industrial Strategy Committee (BEIS) that it was “perverse” that prepaid customers were paying more than others, while E.ON UK boss Michael Lewis said the bills in April would have “serious effects on the ability of customers to pay”.
Chancellor Rishi Sunak announced a £200 refundable rebate on bills for houses in England, Wales and Scotland from October, and a further £150 council tax reduction for most households in England. But Labor has criticized the plan, calling it a “buy now, pay later” scheme.
Energy company Utilita has over 800,000 customers, most of whom use prepaid smart meters. At the company’s headquarters in Eastleigh, Hampshire, the customer call center had a busy month with a 60% increase in call volume compared to last April and 40% more applications for interest free loans.
Sasha Dixon leads the Extra Care team that looks after the most vulnerable customers and says it’s been a very difficult couple of weeks.
“I’ve been with Utilita for seven years and I’ve been on this team since the beginning and this is the worst thing I’ve ever seen,” she said in need of support.
“We had a customer call us last week who had actually sold all of his stuff just to get money to eat. They had nothing left to sell and were waiting for a benefit,” she added.
Utilita founder and CEO Bill Bullen said April was a “real shock” to household budgets and the price hikes had an immediate impact.
Like Citizens Advice, the company has observed an increasing number of customers not topping up their meters because they are running out of money. He said they would do whatever they could, but there was a limit.
“The reality of an energy company today is that it is not a profitable business. There’s no spare money to spend with clients and that’s what’s really frustrating,” he said.
“Even in a really good year you might dream of getting a 2% or 3% margin, but that’s only around £20 or £30 per customer and what we’re seeing here is an increase in bills of around £1,500 per year .
“There is no way that utility companies can even begin to address this problem. It’s way out of our league,” he added.
Mr Bullen said it’s great that the government is providing energy bills and tax breaks for the community, but it’s not nearly focused enough.
“If they had spent £9 billion on the 10 million lowest income households I think they would have made the problem even bigger,” he said.
“Instead of having £200 for every household, you could have had £600 for the bottom third of households.”
He said everyone in the industry is 100% focused on getting their customers through next winter.
“I think the shock in October will be huge. We will definitely see things like unnecessarily increased deaths during the winter period and only real hardship. People don’t have that extra £1,500,” he said.
But with continued high demand for gas around the world as countries move away from Russian supplies, he’s not optimistic that prices will drop significantly any time soon.
“Everyone is hoping that this will be relatively short-lived, but the balance between supply and demand suggests to me that this will last for years rather than months,” he said.
Add Comment